Apple TV 3.0 update not helping sales as AirPort routers lose share

Though it was given a software upgrade to version 3.0 in October, Apple TV sales have remained relatively flat over the past 12 months. Similarly, sales of AirPort base stations have struggled to gain momentum due to higher-than-average price points, resulting in minor share declines.

Apple TV

Sales of Apple's wireless streaming set-top-box are up less than 10 percent in 2009 on a unit-by-unit basis, Steven Baker, vice president of industry analysis at NPD Group, told AppleInsider. But without a definitive product to compare it against, its total market share presence is unknown.

"We have a category where we put a lot of these networked content products," Baker said. "It's a bit of a stretch to say somebody is buying one product instead of another in that category."

Released in October, Apple TV 3.0 gave users a redesigned software interface and allowed users to watch iTunes Extras and iTunes LPs in full-screen in their living room. It also granted access to Genius Mixes and Internet radio.

The free-of-charge software patch was made available for all Apple TV users, but was not accompanied by a hardware refresh. In September, Apple discounted the 160GB model to $229, and discontinued the 40GB Apple TV product.

Baker said he believes the minor gains by Apple TV over the prior year are likely because sales at the end of 2008 were slow in general. In fact, most of Apple's lesser-discussed hardware products have shown unremarkable performance through 2009, with the exception of the new multi-touch Magic Mouse.

"Most of them, in terms of their overall performance, have pretty much plateaued," Baker said. "We don't see huge kind of growth numbers there."

Since its inception three years ago, Apple TV has been seen by many industry experts as a possible game-changer with broad potential. Some have even gone as far as to predict it could turn into a multi-billion dollar business should Apple equip it with a TV tuner and DVR capabilities. However, poor economic conditions intertwined with content licensing complications have seen the Cupertino-based electronics maker maintain the product largely as a side interest.

When asked last year about the "digital living room opportunity and how it relates to Apple TV," Apple Chief Executive Steve Jobs said, "well again I think the whole category is still a hobby right now. I don't think anybody has succeeded at it. And actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away."

"So I have to say that given the economic conditions, given the venture capital outlook and stuff, I continue to believe that it will be a hobby in 2009," he added.

Still, Apple as early as January said it would continue to pump money and resources in its set-top box business because it expects the product segment to break free of some existing barriers down the road.

"It is clear the movie rental business is working and there are more customers who want to try it," Apple Chief Operating Officer Tim Cook told investors during a conference call. "We will continue to invest there, because we believe there is something there for us in the future."

AirPort Base Stations

Meanwhile, it's a similar story for Airport and Airport Express, both of which have been unchanged in sales or market stature, Baker said. The Airport is fifth in the market, behind Linksys, Belkin, D-Link and Netgear.

"I think the Airport is probably a little expensive compared to some of the other wireless access points that are out there," he said. "It lost a little bit of share on the overall basis over the last year or so. We've also seen the Airport Express kind of start to slow down in terms of volume."

In addition, while the Time Machine consumer network attached storage device is a market leader, it exists in a very small niche.

"Consumer NAS is a minuscule marketplace compared to external hard drives for consumers," Baker said. "So it's the big fish in a very small pond."

A deal with Hulu or some of the networks to add commercial based streaming through their existing channels would make it a more attractive product.

Some form of "À la carte" subscription service could help a lot as well if they could get enough content providers on board. I think that there is a large number of the population that would happily cancel their cable if they could get the 5-10 channels that they really watch over the internet for half the price (even if they still had the advertisements), especially if it were an "on demand" type service.

Not surprised. The Airport is well built and stylish, but prohibitively expensive. Knock $50 off of it and the 1TB time capsule as well as $100 off the 2TB capsule and they would sell very well.

As for AppleTV. Unless the movie studios permit Apple to give it the ability to import your DVDs, its not going to catch on, especially at $230. In a lineup of integrated multi-use devices, its a one trick pony that requires a separate DVD or Blu-ray player for your current movies, a PVR for recording your shows or games, and video game console if you want to do that. Combine one, two, or all of these features, or integrate it into TVs and it would sell much better.

The AppleTV isn't going anywhere except niche sales to Mac owners who don't know about Netflix and all the devices (X-Box, PS3, Roku etc) that allow streaming of content directly to their HDTV or computer (uses Microsoft's DRM installed in browsers)

Netflix is neutral, so it has much more content and is the best value around. It's sweet that it remembers where I left off in a movie or TV series, even a few days later. It remembers what I've watched etc.

On the other hand, Steve Jobs is the largest shareholder of Disney, which owns ABC so there is a conflict/competition issue from other content generators. They don't want Apple to get a monopoly like they did with the music industry. Also rentals from iTunes is just too expensive in comparison.

I routinely use my PS3 and a Netflix disk to stream shows and movies to my HDTV anytime I want to watch for only $13 or so a month unlimited.

Not all the content is stream-able though, some require a real DVD, so those get sent in the snailmail.

As far as Airport: What I feel occurs is new folks get a Mac and realize they need a internet connection at home. So they call the phone or cable company and they come and install a dual device (modem and wifi in one) or a PC geek friend sets one up for them with a device from online or local store.

To properly set up and harden a router does require some knowledge which may be outside of the typical Apple Store customers learning curve.

To change the default password to a highly complex one, to create encryption WPA2 with AES (WEP and WPA are cracked), to lock out other computers via MAC address, turn off ping and remote access an create just a guest internet access only.

I also find AirPorts necessity to rely upon the time from a computer especially annoying. If the time is wrong, your Airport doesn't work.

Since I ditched my Airport I have been much happier.

Time Machine:

A lifesaver for those newbies who don't know anything about backing up. However since Time Machine isn't bootable, it's a pale solution to simply cloning your entire boot drive using Carbon Copy Cloner or other which is much superior as it also provides hardware protection as you can 'hold option' and boot from it.

AppleTV is the ticking time bomb. At some point it gonna do it's thing. Maybe soon now. It's just taken a lot of time for Apple to corral all the ducks in a row. I hope that time is approaching. (I think it is)

As for Apple's router products... well, all I can say is that they are absolutely phenomenal products; and that they are just too expensive given the other options available in the market.

With its current level of functionality the Apple TV just needs to be cheaper. The complexity of the current hardware platform prevents that from happening. Apple should move the ATV to an ARM SoC design and ditch local magnetic based storage. 16GB of flash memory would be enough to buffer streamed content and pre-cache downloads (purchased items) before syncing them with iTunes. This should make a $99 entry level price realistic. Combined with a new wave of advertising I think it would be a popular mainstream device. Another key would be creating an Apple TV App Store. Apple can't provide all the content themselves so they should focus on building a platform and partnering with other companies to delivery content to the TV.

The AppleTV isn't going anywhere except niche sales to Mac owners who don't know about Netflix and all the devices (X-Box, PS3, Roku etc) that allow streaming of content directly to their HDTV or computer (uses Microsoft's DRM installed in browsers)

Netflix is neutral, so it has much more content and is the best value around.

On the other hand, Steve Jobs is the largest shareholder of Disney, which owns ABC so there is a conflict/competition issue from other content generators. They don't want Apple to get a monopoly like they did with the music industry. Also rentals from iTunes is just too expensive in comparison.

I routinely use my PS3 and a Netflix disk to stream shows and movies to my HDTV anytime I want to watch for only $13 or so a month unlimited.

Not all the content is stream-able though, some require a real DVD, so those get sent in the snailmail.

I wish Netflix was available in Canada. Although I am expecting Apple to break out of their movie slump fairly soon. Apple TV is old and in need of an update, the App store is a proven concept (it would do wonders for Apple TV), the latest iPhone and iPod touch could play 720p video if Apple allowed it, the iPod AV dock is outdated (old remote)and due for an HD replacement, and significant changes to iTunes Store are anticipated. I even expect blu ray soon It looks like they might have to deal with this tablet business first though.

If Apple starts taking video seriously, the studios will have to buy in at some point. Greed will dictate that.

Having never owned an Airport router of any kind, I have to ask those with experience: Are there really any functional advantages to Apple's routers (like ease of setup) that justify the much higher prices?

5. MOST IMPORTANTLY...apple needs to allow downloads of my own DVD's and Blu-ray content. Or at least allow me to download a movie i already own for $0.99 or something. It's just BS that i can't put my own DVD's or Blu-rays in my iTunes!!!

Then you would really have something anyone with an internet connection would love to own. I don't think this is too unreasonable to do with the current hardware?

I am a true fangirl. It works well for me. Don't know about the firmware - and don't care. Don't know about QoS. Yes it looks much nicer in my home than the competitors.

It was also very easy to setup. 10 minutes. I have an older AEBS and a first gen Airport Express.

Just created a 2 network system where I have Macbook and ATV on the 802.11n (5ghz) and Tivo/iPod Touch on the 802.11g network.

This was also incredibly easy to setup after I went to the Apple Discussions and got a bit of help from other users. Don't know of a vendor who has more effective forums available for users like me. It took me 10 minutes to find the AirPort Express and an ethernet cable. And 5-10 minutes to do the new configuration.

AppleTV needs to completely change it's philosophy. Rather than just buying and playing what's on iTunes, it needs to play all videos that I have on my computer. I would love to see something like:

Insert any DVD and AppleTV automatically imports it into its Hard Drive. Rather than having content take space on your computer and Apple TV why not just have it in once place and allow streaming when on WIFI.

There needs to be a better integration into web and social networking. It has YouTube but it's so phony. Give us real YouTube where you can see your account, rate, leave comments etc. And youtube is not the only web channel AppleTV needs. Vimeo needed as well.

I just hope whatever updates they bring for the appletv will be able to work on the current gen hardware. I think they have sold alot of them and leaving them out would be crappy as all hell.

I would be happy with more powerful hardware. 1080p would be good for some people who have their own video. I would also like more diskspace so I don't have to stream from iMac - external would be great.

WHile I know a lot of people want more... my current Apple TV works well for what it was intended.